The Bitcoin world is coming to grips with a shocking revelation that could potentially threaten the very existence of the world's foremost cryptocurrency.
An analysis of the Bitcoin blockchain – the publicly accessible ledger of transactions upon which the system is built – has revealed this vast trove of data is irrevocably tainted with unremovable links to illegal child pornography, which are inevitably distributed among and by all users of the currency.
The discovery of this – in addition to other questionable and possibly outlawed content stored within the blockchain – hypothetically makes Bitcoin ownership illegal in almost every country that has laws against the possession and distribution of images of child abuse.
That's the view of a team led by researchers from Germany's RWTH Aachen University, who sifted through the blockchain to examine how much "arbitrary data" it contained.
While the open ledger is primarily intended to store financial information related to Bitcoin transactions, non-financial information can also be inserted into the blockchain by users on the system – and to drastic effect.
In their analysis, the researchers uncovered more than 1,600 inserted files on the blockchain, over 99 percent of which are texts or images, including links to child pornography, copyright violations, privacy violations and more.
The data capacity of each 'block' on the Bitcoin blockchain itself is a very slim 80 bytes. That's not enough for actual images to be housed, but plenty for web links or other code pointers and references.
"Our analysis shows that certain content, eg. illegal pornography, can render the mere possession of a blockchain illegal," the team writes in its paper.
"Since all blockchain data is downloaded and persistently stored by users, they are liable for any objectionable content added to the blockchain by others. Consequently, it would be illegal to participate in a blockchain-based [system] as soon as it contains illegal content."
The potential ramifications of that statement can't be emphasised enough. If the researchers' contention is correct, the problems here aren't limited to just Bitcoin.
Potentially any cryptocurrency or other technological system based around a user-manipulable (and permanent) blockchain could be susceptible to the same illegality – although this is very new territory legally speaking, which lawyers, judges, and legislators will have to address.
Right now, though, despite the controversial novelty of the researchers' discovery, it looks like there's a pretty arguable case that Bitcoin possession does in fact break the law.
As the researchers point out, 112 countries have ratified an optional protocol to the Convention on the Rights of the Child that makes possession of child pornography illegal – and the team's preliminary analysis of statute law in the US, England, Germany, and Ireland suggests Bitcoin ownership could already be a legal violation in those countries.
In other quarters, some argue that mere links to illegal content should not be conflated with illegal content itself. That's one point of view, but given the seriousness with which lawmakers treat child pornography, it's not like Bitcoin doesn't have a serious issue here.
In any case, it will be up to courts and legislators to determine how to regulate Bitcoin and the problematic contents of its blockchain, now that the topic is facing much greater publicity.
Interpol actually identified this threat of illegal or dangerous (ie. malware) content being embedded in blockchain systems back in 2015.
In their analysis, the researchers didn't find any malware, but they did turn up evidence of all sorts of random information interspersed in Bitcoin's public record.
This includes wedding photos, emails, chat logs, cryptographic keys, and WikiLeaks data – in addition to a copy of the famous original Bitcoin paper, whose anonymous author has never been formally identified.
We wonder, did the mysterious creator of Bitcoin ever imagine the paradoxical complexity of this loaded Trojan Horse they were setting loose upon the world?
We'll probably never know the answer, but we doubt we've heard the last of this.